ORAM Time for leadership
The three things New Zealand needs to tackle with Australia.
Three troublesome trans-Tasman issues – supermarkets, economic integration and second class citizenship for some Kiwis in Australia – remind us there are distinct limits to how close we should get to our neighbour.
All three issues were aired when our two countries’ Prime Ministers, cabinet and business leaders met in Sydney 10 days ago. All three were handled poorly.
The conclusion is stark: Yes, we should work with Australia on mutually beneficial issues. But we should maintain the flexibility and independence we need to maximise our opportunities in the wider world. If we don’t, we’ll end up as Tasmania’s twin sister.
In the case of supermarkets some New Zealand exporters say Coles and Woolworths are denying them the chance to compete for shelf space against Australian producers. Since the near-duopoly has 80 per cent of the Australian grocery trade, this leaves our suppliers little hope of selling in Australia.
In reply, the two chains say their customers want fresh Australian meat and produce and Australian sources of supermarket own-label goods. There are still plenty of opportunities for New Zealand branded goods and those with a strong consumer following.
And anyway, they say they are behaving no differently from the supermarket duopoly in New Zealand – NZ-owned Foodstuffs with its New World and Pak‘nSave stores, and Countdown, which is owned by Woolworths.
The latter point was a poor defence. Once again this week some suppliers and their association, the Food & Grocery Council, spoke out about the way supermarkets aggressively extract onerous terms from them. The supermarkets were quick to pledge only the best behaviour.
Who does what to whom is never clear. Each aggrieved supplier has its own story to tell.
But whether these are triggered by particular circumstances or are evidence of a wider pattern is difficult to determine. They are also hard for governments to rectify, as the two prime ministers showed in Sydney with their weak responses.
The supermarket-supplier relationship is one of the most imbalanced and abusive in business the world over. Even major multinational producers of famous brands find it hard to pushback against the selling power of huge supermarket chains, as Fonterra has discovered on occasions here in its home market.
The only real escape for food producers is to shun the supermarkets and find other ways to sell to consumers. This is exceptionally difficult to do. Small producers rarely have the resources to build those relationships; and larger producers need big sales volumes that usually only supermarkets can offer. As soon as a producer thinks of exporting, the challenges escalate sharply.
Social media, though, offer one glimmer of hope. Used creatively, social media can help a food producer build up a base of loyal consumers who in turn become promoters of the products. One of the best local examples is Whittaker’s chocolate.
Social media can also help consumers become betterinformed and more effective advocates. Maybe, for example, Kiwi consumers will use the tools to push supermarkets into fairer supplier relationships.
This could extend even to consumer support for Kiwi companies in Australia. The pressure on Woolworths would come through its Countdown chain here; and for Coles through Kmart and Bunnings stores here, which are sister companies in the Wesfarmers group in Australia.
However, while prime ministers Abbott and Key were fulsome in Sydney about the benefits CER had delivered, they failed to give strong leadership on the future.
The main roadmap is the research paper ‘‘Strengthening Trans-Tasman Economic Relations’’ produced in December 2012 by the productivity commissions of the two countries.
In aggregate, they would make trans-Tasman business easier and more efficient. But all the prime ministers committed to was a ‘‘process’’ by which they would work through the issues. They did not pledge any specific actions. Businesses will need to push them hard to deliver useful things.
But there’s a much bigger problem. The trans-Tasman economic discussion has never got beyond a narrow tactical focus on efficiency. That won’t get us very far. Even if we had one market of 27 million people we would still be tiny in world terms.
The much more interesting questions are strategic: Do we have any complementary economic strengths? If so, how can we use them to do more in the world together than we can do on our own? And how can we avoid our respective weaknesses damaging those opportunities?
Australians, however, have always focused on their own economy, even more so now it needs some major repairs.
While there are often some benefits in that for us, our far bigger opportunities lie in the global economy playing to our strengths rather than offering the world Aussie-light.
When it comes to second-class citizens at the last count in 2012, 540,000 Kiwis lived in Australia. Of those, 340,000 had residency status with all the benefits enjoyed by Australians except the vote; and 200,000 were there on ‘‘special category visas’’ which denied them basic rights such as superannuation and some health, education and disability benefits. Meanwhile all Australians living in New Zealand have exactly the same benefits as Kiwis, including the vote.
Australia says we’re lucky. We alone among all nations have the right to travel to Australia and to live and work there. That’s true but we are usually useful. As Robert Menzies said, Kiwis in Australia are ‘‘lifters not leaners’’.
This is not a dry accounting issue of whether Australia can afford to treat them properly. This is about basic human rights for all Kiwis who are contributing their talents and energy – their lives – to Australia.
Regrettably, Key’s comments in Sydney gravely damaged their cause and demeaned them in the process. First he referred to the Kiwis on special category visas as ‘‘guest workers’’, a disparaging term worldwide for second class citizens denied basic rights. Second, he said the pensions and other benefits denied are ‘‘nice to haves’’. They aren’t. They are fundamental rights in a civilised country. We must lead on these three trans-Tasman issues, among others. We can show Australians a better way of doing things, for their benefit and ours.